The Budget is coming at a time when the GDP growth rate has dropped to one of the lowest in the last few quarters. However, the prognosis for long-term growth of the Indian economy remains largely positive.
Much of this growth will be led by private consumption expenditure. India is at an advantage with few secular trends which have emerged in the last decade.
Growing disposable income, high urbanisation and nuclear families with working women have changed the attitude and heightened the aspirations of Indian middle-class consumers.
This, along with the increase in the share of middle-class in the population, will be the key drivers of consumption growth in this country.
But the condition to tap this consumption growth remains that Indian retailers will need to create large infrastructure and suitable formats to cater to the rising aspiration of the consumers.
Low margins
Since retail is a long-gestation business with low margins, the Government will have to play its proactive role through its policies.
Retail industry needs great amount of support in terms of polices and regulations .Some of the key expectations by the retail sector from this year's Budgets are:
* FDI in multi-brand retail should be allowed as it will broaden the range of options available to raise capital.
* Retail sector should be deemed as a priority sector, thereby mandating for private and public sector banks to fund retail. Minimum limits should be set for allocation of funds by banks to boost the growth of retail sector.
* FII investments should be enabled even in the absence of FDI in multi-brand retailing.
* Policies regarding carry-forward of losses and mergers and acquisitions should be relaxed.
* Time-bound Customs duty relief should be given on capital imports for retail like for hand-held scanners, fork-lifts, cold chain equipment, etc.
* Special tariff loans for warehousing and back-end processing.
* Increase in the maximum limit of reimbursement for financing the building up of cold chains by the industry for refrigerated storage centre, transport and processing centres.
Apart from this due to high degree of sensitivity of the retail business to real estate costs, it would benefit greatly from the following policy changes:
Exemption of rentals from service and property tax.
Uniformity in licenses required across the states to start and run retail operations (Stores, Distribution Centers).
Single door clearance for all licenses to run retail stores.
Uniform legislation allowing shops to operate 365 days and extended hours.
Retail space to be part of city master plans & clear zoning laws to be announced which take into account commercial retail space required by consumers.
All these actions on behalf of the Government will help build an efficient and sustainable retail value chain in the country.
Better realisations
This will help not only drive consumption but also help farmers and small and medium manufacturers by giving them an opportunity to get better price realisations. Retail also has a potential to add 8-10 millions jobs in the coming decade.
This sector will provide a boost to Indian growth if supported timely and adequately at this stage.
I hope the Budget of this year will take care of this aspect.
(The author is Chairman, CII, National Committee on retail).